When the uncertainty over raising the U.S. debt ceiling finally ended, the mortgage markets responded by dropping interest rates to new 2011 lows. The future path of these rates remained clouded, however, by another unresolved issue: Would the rating agencies follow through with threats to lower the U.S. credit rating?

The United States always had enjoyed AAA status but as the debt ceiling debate dragged on, three of the largest rating agencies — Moody’s Investors Service, Standard & Poor’s and Fitch Ratings — warned that could change unless the country made a serious effort to reduce its debt. A downgrade would immediately make Treasury notes less desirable as an investment and rates would rise accordingly. Any increase would eventually resonate throughout the system, raising the cost of all borrowing, including credit cards and mortgages.